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Rethinking regulation in K-12 education

“K–12 education in America is ripe for real deregulation,” writes Michael McShane in his recent paper on school regulations. Hailing from an organization founded by the famed economist and champion of limited government Milton Friedman, his main argument comes as little surprise. But in this measured and insightful paper, McShane discusses the tradeoffs of regulatory approaches and offers several suggestions on ways policymakers can pursue deregulation in K–12 schools.

To set the stage, McShane first describes the tradeoffs to regulatory action. Regulations can serve the greater good. For example, they can help curb monopoly power (anti-collusion laws), mitigate negative externalities (pollution regulations), or address inadequate consumer information (food and drug safety rules). Yet regulatory solutions also have drawbacks, and the paper covers at least three important ones. First, they can open avenues for interest groups to “capture” public rulemaking bodies, resulting in regulations that paradoxically benefit special interests—e.g., teacher unions or any number of educational associations—over the broader public. Second, the sheer number of regulations, piled on top of each other, can have undesirable effects. In education, for example, prospective charter schools may be unwilling or unable to wade through the raft of compliance paperwork needed to operate, resulting in less competition and innovation—and of course depriving students of opportunities to attend quality schools. Third, “screening” regulations can impose opportunity costs that often go unrecognized. For instance, educator licensing deters a certain number of potentially high quality teachers from entering the profession.

With these tradeoffs in mind, McShane then turns to specific steps that policymakers can take when approaching deregulation in K–12 education. I agree with him on two key points, but we’re of different minds on a third.

One commendable idea is to focus on the “worst actors” when undertaking regulatory action, rather than issuing blanket rules that affect all schools across the board. McShane explains: “This [approach] places harm reduction, not micromanagement, at the core of regulators’ jobs.” In my view, teacher evaluation is one example of where this tactic may have yielded better results. It’s possible that test-based evaluation systems would’ve gained more traction had policymakers focused on deploying them in the state’s lowest-performing schools—those most in need of dramatic reform. Instead, states applied this policy to everyone, including high-performing schools and teachers in non-tested subjects. This has bred resentment and all sorts of technical problems, leading states to roll back their evaluation policies.

Another shrewd piece of advice is to “use carrots before sticks.” Here, the paper draws readers’ attention to matters of “adverse selection,” which in education commonly revolves around school admissions policy. The idea is that schools are incentivized to admit easier-to-serve students before more costly special-needs children. Instead of regulating admissions, McShane offers the idea of providing extra support to schools when they serve pupils with greater educational needs—often known as weighted student funding. These funding weights, whether for low-income pupils or those with disabilities, should apply to public schools (to encourage them to serve out-of-district students), as well as private-school choice programs.

As for our area of disagreement, McShane encourages states to allow districts and schools to select their own assessments, including norm-referenced tests like Terra Nova or NWEA. He argues that this approach would give schools greater flexibility to innovate around curriculum and instruction, rather than being motivated to focus on state standards. But there are three significant costs that should be kept in mind. First, with an array of tests being used across the state, parents and the public will have difficulty understanding or comparing performance. Can we be sure that higher (or lower) performance between schools using different tests isn’t a product of varying test content or scoring methods? Some analysts already question the comparability of paper-and-pencil versus online formats for the same test. How much harder will it be when completely different exams are given? Second, allowing schools to determine the exams upon which they’ll be evaluated is a conflict of interest; it opens the door for schools to “game the system” by choosing the lowest-level tests. Third and in a similar vein, this proposal could raise civil rights concerns if schools serving less advantaged students select low-quality tests that encourage poor instruction and gloss over inadequate outcomes. This is one reason why many civil rights groups have supported standardized exams at a statewide level in the federal testing debates.

In the business world, U.S. companies disclose financial information using the same currency, consistent formats (balance sheet, etc.), and generally accepted accounting rules. Though surely imperfect, these reporting rules help to protect the integrity of financial statements, allow for more efficient comparisons of company performance, and help to build the trust needed to invest in American businesses. Likewise, parents and communities benefit when schools transparently disclose academic results using a common yardstick. Students, too, stand to benefit when states deploy high quality assessments that encourage rigorous instruction in math and English language arts.

Overall, McShane is on the mark that the pendulum has swung too far toward regulatory approaches in education. Thankfully, in states like Ohio, lawmakers are taking steps to move towards more flexible arrangements. But sorting out which laws, rules, and regulations matter, which don’t, and what should apply to whom remains more art than science. As he writes, “regulators can be more honest about the tradeoffs in their work.” That pearl of wisdom is a great place to start.